Three technology companies are jointly taking up the cause of the multiple-application smart card.
Gemplus, which is No. 1 in world production of chip cards, has joined forces with Hewlett-Packard Co. and Informix Corp. to create a technical framework for a multiple-service, personal information card.
"We have heard from customers who are interested in putting more functions, more applications, on the card," said Xavier Pon, a Gemplus general manager at the company's French headquarters. "We will be in this alliance to address this request, as well as to work on secure encryption standards, so you can load information from different service providers without endangering the privacy of the consumer."
The alliance believes the key is to give the cardholder control of the information on the card. The consumer would have full access at any time to data stored in the chip, eliminating the need to call the many entities involved in providing or managing the information.
Each participating company brings particular expertise and strengths to the alliance, through which they hope to develop an infrastructure for multi-application cards and market the systems to financial institutions, telecommunications firms, retailers, and other service providers.
The idea of a multiple-use smart card is akin to the holy grail for the next generation of plastic cards. Their powerful computer-chip memories could be allocated to such functions as passports and drivers licenses, frequent shopper and mileage points, health and medical records, and credits, debits, and other payments.
While the technology is available, precious little progress has been made toward its implementation. That's where the high-tech alliance comes in.
Gemplus will contribute its smart card technology. The computer manufacturer Hewlett-Packard will be responsible for encryption and networking technologies. Informix will provide its expertise in data base systems and "middleware," software that provides a communication bridge between older banking systems and PCs and other newer equipment and programs.
Although the partners would not disclose the financial terms of their alliance, they said they were dedicating about 40 people and many millions of dollars to the effort.
The alliance already claims to have at least three companies interested in testing the multi-use card. The group would not disclose the companies' names, but said one is in financial services, another is a telecommunications company, and the third, a retailer.
"The idea is that companies that don't compete against each other - let's say, Shell, Radio Shack, Sears, and United Airlines - will want to get together and issue a card to consumers that would offer deals and flexibility," said Jeff Hudson, vice president of business development for Informix, Menlo Park, Calif.
"Consumers love a deal," he continued. "So it's a big win for the consumers and for the service providers."
Competitors are seen as unlikely to want to share space on a single card.
"Chemical and Citibank do not want to see each other's logo on one card," said David Wiseman, a senior analyst with Forrester Research, a Cambridge, Mass.-based research firm.
"That's the biggest barrier to a cross-institutional card," he said. "But banks can make partnerships with other companies, like local grocery stores or Blockbuster Video. It would be an extension of the cobranding relationships you see today in the credit card world."
Gemplus, Hewlett-Packard, and Informix said their cards would be manufactured to the specifications set by the Europay, MasterCard, and Visa associations. The alliance, however, plans to adopt a separate data encryption method that would be embedded in point of sale hardware, which would augment other data security.
"Usually, encryption in hardware is inherently more secure" than in software, said Richard Robida, senior executive vice president of Speer & Associates, an Atlanta-based consulting firm.
Mr. Robida emphasized he was "speaking in a general way" and, having not studied the chip-card alliance's proposal, was not commenting directly on it.
The U.S. government, which must approve any encryption method before it can be exported to other countries, has called Hewlett-Packard's international cryptographic framework a promising concept that could comply with export policy and provide needed commercial capabilities.
The alliance expects U.S. government approval by mid-1996, at which time it expects service providers to be ready to distribute smart cards to consumers.
